Russia Launches WTO Dispute Against EU Import Duties

16 January 2014

Russia filed its first-ever WTO complaint last month (DS474), targeting EU duties on imports of ammonium nitrate and certain steel products. The move is expected to strain the already tense relationship between the two trading partners, which has worsened noticeably in the past year.

At issue in Moscow's complaint (DS474) are a series of "cost adjustment" methodologies used by Brussels in calculating dumping margins in its anti-dumping investigations and reviews for these products. In trade parlance, dumping refers to the practice of selling goods overseas at prices lower than their normal value.

Among other concerns, Moscow claims that the EU in calculating these dumping margins did not account for the actual cost of energy - such as electricity and gas - used in the manufacturing process.

EU Trade Spokesman John Clancy has said that the Commission is "confident that the measures indicated by Russia in its request for consultations are consistent with WTO rules," pledging that the 28-nation bloc will enter the consultations "in good faith."

Under WTO rules, Russia and the EU have 60 days to conduct consultations to find a mutually acceptable solution to the dispute. If this fails, the complainant may then request for a panel to be established to hear the case.

Moscow's first foray as a complainant in WTO proceedings will likely be watched closely by the trade community. Russia has made clear that it will be an active participant in the global trade arbiter's dispute settlement system, with Russian Economic Development Minister Alexei Ulyukayev promising last September vigorous use of the forum to lessen trade barriers and "protect the interests of our producers and exporters."

Tensions running high

Brussels and Moscow have already found themselves at loggerheads on multiple occasions over the past year, with EU officials openly questioning Russia's adherence to WTO rules. See Bridges Weekly, 19 September 2012)

Last July, Brussels launched a formal dispute against Moscow against a contentious "vehicle recycling fee" - Russia's first case as a respondent. (See Bridges Weekly, 24 October 2013) Japan has also challenged the Russian vehicle "recycling" programme named in the EU complaint.

The EU and Japan claim that the measure is discriminatory, and therefore in violation of WTO rules, since vehicles produced in Russia or in one of its customs union partners - Belarus and Kazakhstan - can qualify for an exemption from paying the fee. Imported automobiles from outside the customs union, by comparison, are not eligible for an exemption.(See Bridges Weekly, 24 October 2013)

Russia has since amended its domestic legislation to remove the exemption for domestic automobiles, with the change coming into effect last week.

Whether the EU and Japan will continue with dispute proceedings is still unclear at this stage. The EU had submitted its first panel request in October, which Russia rejected; should Brussels decide to re-file its request, a panel would automatically be established to hear the complaint.

The two trading partners also spent the past several months embroiled in a public tug-of-war over the EU's efforts to sign association agreements with Ukraine, Georgia, and Moldova.

Ukraine, under what the EU deemed was undue pressure from Russia, ultimately decided against signing the deals - a decision that sparked riots in the streets of Kiev. Georgia and Moldova, meanwhile, followed through in signing their respective EU agreements. (See Bridges Weekly, 12 December 2013)

ICTSD reporting; "Russia to Use WTO to Protect Domestic Producers," RIA NOVOSTI, 28 September 2013; "Russia files first trade complaint against EU," AFP, 24 December 2013; "Russia enforces law to even playing field on auto recycling fee," KYODO NEWS INTERNATIONAL, 7 January 2014.

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